In a report published Wednesday, Bank of America analyst Juan C. Sanabria upgraded the rating on Sabra Health Care REIT SBRA from Neutral to Buy, and reiterated the $28.50 price target.
In the report, Bank of America noted, “We are upgrading SBRA from Neutral to Buy on valuation with a $28.50 PO. We see SBRA as oversold trading at 11.3X 2015 AFFO (Exhibit 1), 28% below the HC sector weighted average. SBRA also screens attractive at a 7.2% implied cap rate, vs. AVIV (pure play SNF) at 7.3% & the HC sector at 6.3%. Our PO assumes SBRA trades at 13.5X forward four quarters AFFO, which is currently a 17% discount to diversified peers (HCN, HCP, NHI & VTR) and 9% discount to the sub-sector. At our PO, SBRA's implied cap rate would be 6.7% vs. diversified peers at 6.1%.”
Sabra Health Care REIT closed on Tuesday at $24.92.
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